[S]ome economic gauges suggest wages are set to accelerate in the months ahead...This is not what a recession looks like.
One measure gaining popularity is the Federal Reserve Bank of Atlanta’s wage tracker. Some economists say the indicator, which hit a seven-year high last month, is a better gauge of wage inflation because it adjusts for composition bias. The more familiar average hourly earnings series put out by the Labor Department’s Bureau of Labor Statistics is influenced by demographics — namely, the large number of retiring baby boomers who are leaving the workforce with wages that are higher than those of new entrants. “It’s masking an underlying gradual increase,” said Nariman Behravesh, chief economist at IHS, of the BLS wage data that showed wages rose 2.5% from a year earlier. He favors the Atlanta Fed’s measure because it looks at wages of people who have remained in their job for at least a year....
Small businesses have been reporting increasing difficulty filling open jobs, a sign they’ll have to raise pay to lure workers. According to the National Federation of Independent Business, a trade group for the small-business sector, more than a quarter of firms surveyed in May said they had positions they couldn’t fill. The same share reported raising compensation during the month –- high for this recovery, according to NFIB chief economist Bill Dunkelberg. The problem is especially acute for small businesses seeking highly skilled workers.
“The small-business sector is where all the action is,” said Mr. Shepherdson, who notes that the NFIB’s jobs-hard-to-fill measure closely tracks the Atlanta Fed’s wage gauge. That NFIB indicator leads real wages, he said, adding that “the NFIB numbers now clearly suggest that real wages will rise more quickly over the next year.”